The A2 Milk Company Ltd (ASX: A2M) share price continued its slide on Friday.
The fresh milk and infant formula company's shares ended the day down 1% to $5.73.
This means A2 Milk shares are now down 51% since the start of the year.
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Is the A2 Milk share price a bargain buy?
While opinion is admittedly very divided on where the A2 Milk share price is going next, one top broker expects it to rebound higher.
According to a recent note out of Bell Potter, its analysts have retained their buy rating but trimmed their price target on the company's shares to $7.70.
Based on the latest A2 Milk share price, this implies potential upside of 34% over the next 12 months.
What did the broker say?
While Bell Potter has reduced its earnings estimates materially, it still believes the A2 Milk share price offers value for money. Particularly given the good work the company has done rebalancing its inventory after a disastrous FY 2021.
Commenting on its inventory, the broker said: "We think the market is underestimating the impact that inventory swaps and sales pullbacks [had] on FY21 and while this is unlikely to be recovered in FY22e, it gives a glimpse of the relative FY21 under earn relative to baseline. As YOY comparisons become softer in 2H22e and with inventory positions reduced we would anticipate a resumption of top line growth to ensue."
"Our Buy rating remains unchanged. Sell-in rates materially lagged sell-out rates in 2H21, implying steps to reduce channel inventories have been effective. As revenues more closely align to point of sale trends we would expect top line growth to return, which could well be complemented by internalising supply chain costs in FY23-25e," it added.
Overall, while the last 12 months have been bitterly disappointing for the A2 Milk shareholders, Bell Potter appears cautiously optimistic that it will be a different story over the next 12 months.
